Energy transition infrastructure is an investment theme that more investors are turning to as they rethink how they construct their portfolios. Not only does the relatively new asset class tick a lot of boxes as an effective portfolio diversifier, but it also has room for massive growth.
In an episode of the Disruptive Forces podcast, Neuberger Berman’s head of infrastructure investing J. Michael McCarthy talks with host Anu Rajakumar about how the growth of investing in energy transition infrastructure can provide an intriguing opportunity for investors.
“We really have a need to decarbonize our electric grid and indeed our economies,” McCarthy said. “And countries and governments have been doing a good job lately of legislating towards that, but we need broader adoption. So that is a major investment opportunity and theme.”
McCarthy added that the theme of energy transition “will continue to grow with the predominance of private capital,” and that “there’s currently a huge opportunity” there.
“G20 estimates that the world would need $94 trillion of investment through 2040 just to support current growth,” he said. “And sources of investment, or sources of capital support that estimate really leave a $15 trillion investment gap.”
Investors wanting to invest in this growing megatrend of energy transition infrastructure may want to consider the actively managed Neuberger Berman Carbon Transition & Infrastructure ETF (NBCT ). Launched in April, NBCT seeks to invest in companies that are focused on or are transitioning their business to focus on one or more of the following themes:
- Low-carbon resources: issuers focused on producing renewable energy, such as solar, wind, geothermal, and green hydrogen, and the related storage and transport of these energies.
- Electrification: issuers that help enable the replacement of technologies that use higher carbon-emitting fuels with those that use low-carbon resources as a source of energy, including those that support smart grid and electric vehicle-charging solutions, as well as electricity transmission and distribution that helps expand usage of low-carbon solutions.
- Carbon reduction solutions: issuers that directly facilitate the carbon reduction goals of infrastructure owners, including innovative raw materials, industrial gases, engineering and construction service providers, environmental services providers, and environmental technology providers.
Neuberger Berman managed $18 billion in thematic equity investments for global clients as of December 31. Its ETFs are designed to broaden access for individual investors and their advisors.
“We feel that thematic investing, which is forward-looking in nature, can benefit from the adaptable forecasting abilities of active managers,” said Neuberger Berman ETF specialist Fred Edwards.
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